Illinois Citation to Discover Assets Guide

Facing a judgment can be overwhelming, and a Citation to Discover Assets can add to the stress. Citations can disrupt household finances, potentially causing missed mortgage or rent payments if your bank account is unexpectedly frozen. If you’re navigating this process in Chicago, Cook County, or anywhere in Illinois, it’s essential to understand how it works. Take a moment to learn about what a citation entails and how it may affect you before taking any action.

What are Citations to Discover Assets?

A Citation to Discover Assets is a legal order requiring you to provide information about your income and assets so a creditor—someone you owe money to—can determine what you own that could be used to pay the debt. There are three main types of citations:

Citation to the Judgment Debtor: This is issued to you personally and requires you to disclose details about your finances directly.
Citation to Debtor’s Employer: This leads to wage garnishment, where a portion of your wages is deducted to pay the creditor.
Citation to Third Party: Typically issued to your bank or another institution holding your funds, this results in a frozen bank account until the creditor determines what funds can be used toward the debt.

The citation will outline the amount owed, the judgment creditor’s identity, and the date you must appear in court or online for a hearing. Although it can feel overwhelming, this process allows the creditor to assess your financial situation. It may lead to actions like wage garnishment or asset collection, but it also opens the door to discussing possible payment plans or settlements.

How Citations Restrict Asset Transfers

In Illinois, when a Citation to Discover Assets is served upon you, the Judgement Debtor, it creates a lien on your non-exempt personal property 735 ILCS 5/2-1402(m). This lien prevents the debtor from transferring or disposing of those assets while the citation is active. A typical citation includes clear language that outlines this restriction:

YOU ARE PROHIBITED from making or allowing any transfer or other disposition of, or interfering with, any property not exempt from execution or garnishment belonging to the judgment debtor or to which he/she may be entitled or which may ne acquired by or become due to him/her, until further order of court or termination of the proceeding.

This language illustrates the power of the lien and serves as a warning to the debtor against transferring assets. Here’s a closer look at how it operates:

Lien Creation: The citation acts as a lien on all non-exempt personal property of the debtor from the time of service. This includes money, accounts, and other personal assets that the debtor possesses or may acquire during the citation’s active period.

Scope of the Lien:

If served directly to the debtor, the lien covers all personal property that the debtor currently owns or acquires during the citation’s duration.
If served on a third party, such as a bank or employer, the lien applies to any property of the debtor that the third party currently holds or may acquire while the citation is active. This includes wages deposited into a bank account or earned through employment.

Effectiveness: The lien restricts the debtor from transferring or encumbering assets, ensuring that they remain available to satisfy the judgment. This restraint is crucial in supplementary proceedings because it ensures that creditors have a chance to locate and potentially seize assets for debt repayment.

Exceptions: The lien created by the citation does not affect third-party rights prior to the citation’s service, nor does it impact bona fide purchasers or lenders without notice of the lien.

The lien thus acts as a protective measure for creditors, giving them priority over any subsequent attempts by the debtor to transfer assets, while the citation is ongoing.

What Kind of Transfers Are Stopped by a Citation Lien?

If the citation is served directly to you, it creates a lien on all non-exempt property you own or acquire during the citation period, regardless of whether your bank account is frozen. This lien prohibits you from transferring, spending or using any non-exempt funds or assets. For example, money in a bank account that does not come from exempt sources, such as Social Security or other protected income, cannot be spent, transferred, or otherwise used without violating the lien.

If the debtor needs to use funds subject to the restraining provision,—for example, to pay rent, utilities, or other necessary expenses—they must seek permission from the court. Without prior court approval, spending or transferring these funds could violate the citation lien, leading to significant legal consequences, including contempt of court.

As established in cases like City of Chicago v. Air Auto Leasing Co. (1998), the lien applies even to business-related expenses. A debtor cannot argue that transfers made in the ordinary course of business are allowed. The law is clear: unless the transfer fits into a specific statutory exemption or is approved by the court, it is prohibited.

Legal Consequences of Violating a Citation Lien

Violating a citation lien can result in serious legal consequences. If a debtor or third party (such as a bank or employer) transfers, spends, or disposes of assets covered by a citation lien, the creditor may file a petition for rule to show cause. If the judge determines that the debtor is in contempt for violating the citation lien, this can lead to fines, additional penalties, and, in severe cases, even imprisonment.

Additionally, the court might issue a “turnover order” requiring the responsible party to repay or return the transferred assets to satisfy the judgment. In cases where a third party like a bank fails to honor the lien, they could also be held financially liable to the creditor for the amount they allowed to be transferred.

List of Common Creditor Questions

During the citation process, the plaintiff (also referred to as the judgment creditor) or their attorney can issue a broad set of questions—called interrogatories—designed to uncover assets or income that could be used to satisfy the judgment. These questions can be directed not only to you but also to third parties who may hold or control assets on your behalf. In fact, I have personally been served with a citation to disclose assets because a creditor believed I was holding funds for a client.

Common questions typically asked during a Citation to Discover Assets hearing include:

Income Sources: Detailing all forms of income, whether from employment, freelance work, or other sources.
Bank Accounts: Disclosing all accounts you hold, including checking, savings, investment accounts, and safety deposit boxes. You may be asked to provide documentation such as bank statements, deposits, and withdrawals.
Employment and Pay: Providing pay stubs or other forms of proof for any earned income.
Asset Ownership: Listing assets like vehicles, real estate, and investments (stocks, bonds).
Business Involvement: Detailing ownership stakes in businesses or partnerships and related assets or revenue.
Personal Valuables: Identifying high-value personal property, such as jewelry, art, or collectibles.
Debts and Liabilities: Outlining any debts owed to you, such as loans you’ve made to others.
Trusts and Offshore Accounts: Providing details about any involvement in trusts or offshore accounts, including land trusts.
Additional Income Streams: Information about other sources of income, such as rental properties, royalties, or passive investments.
Retirement Accounts: Sharing details about retirement savings, such as IRAs, 401(k)s, or pension plans.
Large Transactions: Explaining any recent significant financial transactions or monetary gifts.
Tax Records: Producing personal and business tax returns, typically from the last two to three years.

While these are typical questions, the specific inquiries will depend on your financial situation and the assets the creditor believes you may have.

Do I Have to Respond to a Citation to Discover Assets?

Yes, ignoring a citation is not an option. Whether you are the judgment debtor or a third-party respondent, such as an employer or bank, failure to appear can result in legal action for contempt, including arrest under Rule 277(h). If you refuse to comply with a court order to deliver, convey, or assign property, you may still be in violation of the law. The judge will eventually issue a body attachment (an arrest warrant), enforced by the Cook County Sheriff, which could lead to being jailed until compliance. The court can also act against your real estate, bank accounts and personal property. It’s crucial to read the citation carefully and participate in the proceedings to avoid these consequences.

Preparing for a Citation to Discover Assets Hearing

If you’ve received a Citation to Discover Assets, it’s crucial to gather all relevant documents ahead of time to ensure you are prepared for the court-ordered discovery hearing. Below is a checklist of documents commonly requested during this process:

Bank Statements: From the past 12 months for all accounts in your name.
Pay Stubs: To verify your income.
Tax Returns: From the past two years.
Property Records: Proof of ownership, such as titles or deeds, for any real estate or vehicles.
Debt Information: Billings showing any debts you owe.
Business Records: Operating agreements, shareholder distribution records and any documentation showing business ownership or financials.
Retirement Accounts: Statements on IRAs, 401(k)s, or pensions.
Insurance Policies: Documents related to any life insurance with a cash value.

Being organized with these documents can save you from potential penalties or delays in court. By presenting this information upfront, you show good faith and cooperation with the court’s process.

What You Should Know About Your Citation to Discover Assets Court Date

During the Citation to Discover Assets hearing, the judgment creditor or their attorney will question you about your income, assets, and financial obligations. In Cook County, these hearings are typically conducted via Zoom. You will likely be placed in a private breakout room for questioning, rather than in open court, due to the sensitive nature of the information being discussed. Expect to provide details about your bank accounts, property, vehicles, investments, and any outstanding debts. It’s important to have supporting documentation readily available. In many cases, this questioning can lead to wage garnishment or other forms of asset seizure to satisfy the debt.

What is a Turnover Order in a Citation to Discover Assets Case?

A turnover order is something you need to watch out for if you’re involved in a Citation to Discover Assets proceeding. After the citation is issued, if the creditor finds money or property that could be used to pay the debt—such as funds in your bank account—the judge can issue a turnover order (under 735 ILCS 5/2-1402(c)(3)), which forces the bank or another third party to hand over those assets to the creditor.

Turnover orders are commonly granted after your bank account has been frozen, meaning you can’t access your money while the creditor seeks to take it. If you aren’t actively following your case or challenging the creditor, you might suddenly find your account emptied by the creditor—sometimes without warning.

One way to protect yourself is by asserting the wildcard exemption, which allows you to protect up to $4,000 in funds or property. But if you don’t assert your rights under this exemption, you risk losing money that could have been protected. That’s why it’s critical to stay involved in your case. If you don’t, you could wake up one day to find your account drained when you had the chance to protect it.

What Assets are Protected?

Not all of your assets can be taken to satisfy a judgment in Illinois. The law provides exemptions that protect certain assets from collection, meaning you can keep them if you properly assert the exemption. Here are the some of the key exemptions under Illinois law:

Homestead Exemption: Protects up to $15,000 of equity in your primary residence (or $30,000 if jointly owned). 735 ILCS 5/12-901.
Personal Property Exemptions: Covers essential items such as household furniture, clothing, and tools you need for work. 735 ILCS 5/12-1001.
Retirement Account Exemptions: Shields certain retirement accounts, including IRAs, 401(k)s, and pensions, from being seized. 735 ILCS 5/12-1006.
Wildcard Exemption: This allows you to protect up to $4,000 in any personal property, including money in your bank account. 735 ILCS 5/12-1001(b).

There is no specific form to claim any of these exemptions, but they must be asserted in writing. Failing to do so could result in losing protected assets, so it’s crucial to make sure your rights are properly documented.

Protect Your Bank Account by Asserting the $4,000 Wildcard Exemption Early

If you are facing a Citation to Discover Assets, it’s essential to know that you can assert your $4,000 wildcard exemption before the citation is issued. By doing so, you can protect funds in your bank account up to that amount from being frozen, which could allow you to continue meeting basic needs, such as buying food for your family.

Keep in mind, though, that this exemption can only be claimed once—any additional deposits made to the account after claiming the exemption won’t be protected.

According to 735 ILCS 5/2-1402(b), you don’t have to wait until the citation hearing to assert your exemptions on an emergency basis. You have the right to seek a declaration of your exemptions earlier by notifying the court clerk in writing. Once notified, the Clerk of the Court will schedule a prompt hearing date and provide you with the necessary forms. These forms must be completed and sent to the judgment creditor and their attorney, informing them of the time and location of the hearing to determine the exemption.

If your account has already been unexpectedly frozen, the Illinois Court website provides an emergency motion form to request relief. You can use this form to request an emergency hearing to unfreeze your funds and ensure that your essential needs are covered.

Exempt Status of Garnished Wages in Bank Accounts

If funds in a bank account are solely from earned wages that have already been garnished, a creditor generally cannot seize these funds through a citation, as they have already been subjected to the garnishment limitations set by law. The citation statute, 735 ILCS 5/2-1402, offers some support for this position. Specifically:

Exemption of Garnished Wages: Section 2-1402(c)(2) provides that the judgment debtor cannot be compelled to pay income that would be considered exempt under the Wage Deduction Statute. This statute caps wage garnishment amounts and protects a portion of the debtor’s income from being used to satisfy a judgment. Once wages are garnished, they are intended to retain this exempt status, which can apply even after the wages are deposited in a bank account.
Court Determination of Exemptions: According to section 2-1402(l), the court must determine whether certain income or assets are exempt if the judgment debtor declares them as such. This exemption determination includes income that has already been garnished, as those funds have already been reduced by the garnishment percentage allowed by law.

To strengthen the argument that these funds should not be seized, the debtor can request a court hearing to declare these previously garnished wages exempt. Courts typically uphold these exemptions, as double garnishment would reduce the debtor’s income below legally protected levels, counteracting state and federal wage protections. This is why it’s often beneficial to secure a wage garnishment on your paycheck early, as it can help prevent issues with your bank account and maintain stability in household finances.

Can I Object to the Citation?

Absolutely. If you believe the citation is invalid or the requested information is irrelevant, you can consult with an attorney to file objections or motions to quash the citation. However, objecting to the citation alone may not stop the process forever. Your best outcome is to, at most, delay it. One of the only effective ways to stop a citation to discover assets is to successfully vacate the underlying judgment. If successful, your case returns to the litigation stage. However, vacating a judgment is challenging, particularly once you have reached the citation stage, which is pretty much the last step in the legal process.

How to Remove a Citation from Your Bank Account

If a creditor has issued a Citation to Discover Assets on your bank account, there are a few ways to release the citation and regain control over your funds:

Paying Off the Debt and Filing a Satisfaction of Judgment
One of the primary ways to lift a citation is by fully paying the debt. Once payment is received, the creditor files a “Satisfaction of Judgment” with the court, which confirms that the judgment has been paid in full. This document is then submitted to the bank, instructing them to release the hold on your account. This process provides a clear legal record that the debt is resolved.
Setting Up a Repayment Agreement
Another option is to negotiate a payment arrangement with the creditor. This agreement, often structured as a repayment plan, can involve an agreed order dismissing the citation. The creditor presents this order to the judge, who then approves the dismissal of the citation. Once dismissed, the bank releases your account.
Filing for Bankruptcy
Bankruptcy can automatically stay (or halt) all collection activities, including citations. Upon filing, the automatic stay provides temporary relief, preventing creditors from seizing assets or taking further legal action. However, the bank’s attorney will typically need to file a formal dismissal with the court, which may require scheduling a hearing and can take some time. Bankruptcy may be a suitable option if you have multiple debts and need broad financial relief.

Key Elements in a Satisfaction of Judgment

The Satisfaction of Judgment form typically includes:

Creditor Information: Details of the creditor or their legal representative who received payment.
Judgment Details: Case number, amount paid, and defendant’s information.
Acknowledgment of Payment: Confirms full satisfaction and payment of the judgment.
Court Approval: A court-approved release that removes the citation lien, submitted to the bank to lift the citation hold on your account.

Citation to Discover Assets Explained: Common Questions

Illinois Supreme Court Rule 277 governs the supplementary proceedings involved in Citations to Discover. Understanding this rule is crucial for anyone navigating the citation process, whether you’re a judgment debtor or a third party holding assets. Below are some of the key questions commonly addressed by Rule 277.

Timing and Targets

A supplementary proceeding under Illinois law can be started at any time after a judgment is subject to enforcement. This proceeding, authorized by Section 2-1402 of the Illinois Code of Civil Procedure, allows the judgment creditor to recover assets or debts owed to the judgment debtor. The proceeding can be initiated against the judgment debtor directly or against any third party the creditor believes holds property or is indebted to the debtor. For instance, a creditor might pursue the debtor’s bank or employer to discover assets or garnish wages.

If there has already been a completed supplementary proceeding with respect to the same judgment against the same party—whether that party is the debtor or a third party—no additional proceedings can be commenced without the court’s approval.

The creditor can also seek permission through an ex parte motion, meaning the court may grant it without a hearing or notice to the debtor, but only if certain conditions are met. These conditions include:

There is reason to believe the party in question has property or income that can be used to satisfy the judgment.
The creditor was not aware of these assets, income, or debts during the prior proceedings.
There is a valid reason to hold another supplementary proceeding.

This rule ensures that creditors have the ability to pursue assets but prevents excessive or repetitive proceedings without just cause.

How Long is a Citation Valid?

A Citation to Discover Assets is valid for six months from the respondent’s first personal appearance or their first appearance under subsequent enforcement (such as a rule to show cause), whichever occurs first, per Rule 277(f). The court may grant extensions beyond six months if necessary. This timeframe allows the creditor to conduct discovery while limiting how long the citation remains active. The primary purpose of the 6 month limitation is to prevent the harassment of the judgment debtor or any third party subject to the citation proceeding (National Bank v. Newberg, 1972).

Under Rule 277(g), supplementary proceedings against the debtor and third parties can be conducted either concurrently (at the same time) or consecutively (one after the other). The termination of one proceeding does not affect other pending proceedings. This flexibility ensures that the creditor can pursue all available assets and debts without delay or interference between different proceedings.

What Information Must Be Included in a Citation to Discover Assets?

When a creditor seeks to recover assets through a Citation to Discover Assets in Illinois, the citation must meet specific legal requirements under Rule 277(c). This rule outlines the essential elements that must be present in a citation for it to be valid. Below are the key components required:

Case Caption: The citation must be properly captioned in the same case where the judgment was entered. This means it must clearly state the court and case information so that it is linked directly to the existing judgment.
Judgment Information: The citation must include the date the judgment was entered or revived, as well as the amount of the judgment that remains unpaid. This informs the debtor and other involved parties exactly what is owed.
Examination Date and Details: The citation must require the person or entity it is directed to (such as the debtor or a third party like an employer or a bank) to appear for an examination. The citation must specify the date, which must be at least five days after the date of service, and the location or method of the examination. The appearance may be in person or remotely (by telephone or video conference), depending on the specifics of the citation.
Request for Documents: The citation may include a request for the production of specific books, documents, or records that contain information about the debtor’s property or income. These documents should be reasonably specified and must be in the possession or control of the person or entity being cited.

Additionally, the citation must be served and returned in the same manner required for serving a notice of additional relief upon a party in default, as described by other court rules. This means proper service is crucial for the citation to be enforceable. Failure to comply with these requirements can result in the citation being challenged or deemed invalid.

What If I Own a Business That Isn’t a Judgment Debtor?

If you own a business but the business itself is not the judgment debtor (meaning the business doesn’t owe money to the creditor), the business’s income is generally not subject to the citation. However, the creditor can still ask questions to determine if the business is holding any assets or funds that belong to you, the judgment debtor.

While the business may be required to answer questions about whether it holds your personal assets, it is not required to disclose its full balance sheet or provide detailed financial information. Importantly, the business cannot usually be represented by the owner at the citation hearing—it will need to hire its own attorney to respond to these inquiries. This ensures the business’s legal interests are protected and remains separate from your personal financial matters.

What Should I Do Now?

Stay calm and informed: Gather the documents you might need, like bank statements and pay stubs.
Consult an attorney: Seek legal guidance to understand your rights and navigate the process effectively.
Be honest and cooperative: Answer questions truthfully and provide requested documents on time.
Focus on resolution: Discuss with your attorney and the creditor potential options for debt settlement or payment plans.

Remember, being served a citation doesn’t mean your financial situation is hopeless. Stay informed, seek legal counsel, and explore options to address the debt while protecting your rights and exempt assets. Learn more about the power of the bankruptcy automatic stay to stop a citation to discover assets.